HP stock is up 15% in premarket on Thursday: explained here

HP Inc stock (NYSE: HPQ) is up nearly 15% in premarket trading on Thursday after famed investor Warren Buffett revealed a sizable stake in the computer hardware company.

Berkshire now has an 11% stake in HP Inc

Buffett’s Berkshire Hathaway Inc now owns 11% of HP Inc – a stake worth $4.20 billion, confirmed a filing last night.

The announcement comes at a time when Wall Street expects demand for computer hardware to slow down following a COVID-driven surge. In a recent note, Morgan Stanley’s Erik Woodring said:

We believe PC and consumer hardware spending will be pressures as supply improves and demand normalises after two years of above-trend growth.

His investment, however, indicated that Buffett, for one, continues to see value in HP Inc.

HP announced a $3.30 billion acquisition last week

Buffett started loading up on HP shares after the American multinational disclosed a $3.30 billion deal to buy Poly – a California-based communications equipment company. Commenting the news, Evercore ISI’s Amit Daryanani wrote:

HP is committed to one of the largest share-repurchase programs, relative to its market cap, within our coverage. So, Berkshire’s involvement makes sense. We view Berkshire buying HPQ shares as a positive that validates HPQ’s strategy/deep value.

Owning 120.95 million shares in total, Berkshire is now the largest shareholder of HP Inc. In its latest reported quarter, HPQ handily topped Wall Street expectations. The stock price is now back to where it started the year 2022.